In many cases, online traders throw in the towel at the first hurdle. However, learning to ride any losses back to profits over a period of time is the secret to successful trading. Trading requires a level of skill, but also a level of patience. No matter whether you focus efforts on stocks or currency pairs, here are some top tips to help you increase your wins.
- Practice with a demo account
Getting back to basics should allow you to develop your skills. Check to see if the trading platform you select has a demo account. Use it to trade with virtual money. Learn from your mistakes and you should soon be stepping up your game in real trades.
- Use training guides
Most brokers provide training guides on their websites and apps. From videos to written guides, use these materials to improve as you go along. Covering everything from placing orders to more complex chart analysis, these guides can help beginners and those with some experience.
- Learn spread betting or CFDs
If you haven’t considered them already, both of these modes enable you to trade across thousands of financial instruments. Instead of purchasing an instrument like shares in a company, you simply take a spread betting position on the future direction of the stock or financial instrument in question. Uniquely, you can speculate on both rising and falling prices. Spread betting and contracts for difference also provide advantages since trading usually occurs on margin. This means you can open a position worth more than the money you deposit in your trading account. So if you are thinking about learning more about spread betting, it’s good to know it is only available in the UK. It’s exempt from stamp duty and capital gains tax. Contracts for difference is available worldwide and also avoids stamp duty in the UK.
- Don’t risk too much capital per trade
Consider how much you are willing to lose with each trade. Don’t put more than one to two per cent of your account total into an individual position This is particularly true if you are trading on margin, since both losses and profits are multiplied.
- Place stop-loss orders
If you are not already using these, stop-loss orders will protect your profits and minimise losses. Your trade will close at a set price. This is agreed with your broker when you open a trade on your instrument of choice.
- Tune into the news
Financial markets are heavily influenced by world events. Is there a major economic announcement coming up? What about an election? Are there any storms brewing in world politics? Staying up-to-date with current affairs and the latest finance news will help you avoid getting caught out by any unexpected movements in the market.
- Analyse the markets
Learn how to deploy analysis tools to your advantage. If you gain an understanding of technical indicators and charts, for example, you are more likely to make profits. Recognising patterns and trends allows you to trade more knowledgeably.
- Get insights from industry experts
Plenty of online brokers are offering commentary on the markets from industry experts. While they are not claiming to give trading advice, you can get an idea of sentiments about particular markets and trends.
- Learn from your errors
At some point, every online trader will lose money. The best way to overcome challenges is to learn from them. Don’t make the same mistake twice. And don’t quit, just because you made a loss.
- Try different instruments
If one market isn’t working out for you, switch to a different one. Some traders choose to open and close positions across multiple instruments across numerous asset types. Diversifying may benefit you in the long run.